You have been served notice on an impending Internal Revenue Servicem (IRS) audit. Great, now the IRS will be poking into your finances. Now you have some huge IRS problems.

Read the letter before you take action. It will give you an idea exactly what the IRS wants. Remember the period they're auditing, the kind of audit they are conducting, and what documents needed from you. Also, take note of your deadline to respond, which is typically thirty days.

Be careful not to give unnecessary information during the audit. These may prompt the IRS to scrutinize you further. Your goal is to stick to disclosing information on the exact year and documentation being audited.

These papers can help you support the information you supplied on your tax return:

• Bank statements
• Cancelled checks
• Deductions claimed on the tax return receipts
• Income statement report
• Proof of payment for mortgage, property tax, donations, etc.

As soon as you receive the notice, start getting organized right away. These documents may take awhile to gather, as you may have to request for them from other institutions.

While being audited, answer the auditor's questions honestly. Don't talk too much because auditors are trained to look for signs of nervousness and lying. Stick to benign responses during questioning, like Yes, No, I don't recall, I'll have to check on that, What specifically do you want to see?, and why would you like to know?

Bring only documents specified on the IRS notice you got. Extra documentation is not important and might only cause more harm than good. If the auditor asks you about a different tax year or a document that wasn't specified on the notice, simply tell them that the information is not on hand at the moment.

If you agree with the results of the audit, pay the extra taxes and consider your IRS problems over. You have a right to request for an appeal if you disagree.